As the image below illustrates, the home value is limited in how high it can rise by the Home Price Ceiling Fundamental™. Limiting how low home values can fall is the Home Price Floor Fundamental™.

Between the Ceiling and the Floor house values are influenced by other fundamentals including supply and demand, population growth, job growth, and economic factors.

Home Price Ceiling Fundamental™ identifies the top limit of the home value for a zip-code based on local income levels. Historically, home values range 2-4 times income levels. House prices can rise until they reach the ceiling, which is the level where the house price can no longer be supported by income levels. Since 80% of all homes are purchased with a mortgage, when borrowing power is reduced, the pool of potential buyers is reduced and home prices fall. Click here to check the Home Price Ceiling Fundamental™.

Home Price Floor Fundamental™ identifies the lowest the house price level could fall to. This fundamental is based on the premise that since a house can produce rental income it has value as an income asset. What it’s worth depends upon a number of factors, the most important being the yield or Cap rate an investor would expect. Click here to check the Home Price Floor Fundamental™ .

You can use these two fundamentals to establish the highest and lowest property value for the property in question.

	The less variance in house values from Floor to Ceiling, the more stable property values will be.
	The greater the variance in home values from Floor to Ceiling, the less stable property values are.
	If the current price is above the Ceiling, expect price correction downward to price levels at or beneath the Ceiling. Pay attention to the percentage amount of overvalued. The percentages are applicable to other house price levels.
	If the property in question is between the Ceiling and Floor, housing market fundamentals will influence the direction of house prices.

Click here to check the Home Price Ceiling Fundamental™.
Click here to check the Home Price Floor Fundamental™ .

To read a detailed explanation of the Home Price Ceiling Fundamental™,  click here.
To read a detailed explanation of the Home Price Floor Fundamental™ , click here.